This is from Wendell Cox at New Geography (and Demographia):
Middle-income households are increasingly unable to afford middle-income housing, because their prices have been driven up by excessive regulation. More households are added to the queue for subsidized housing, as they can no longer afford the market rate housing that has increased so much in price. With this demand, induced by excessive regulation, its governments typically have long waiting lists for subsidized housing. It is not surprising that homelessness is increasing in this environment. When people must pay more for housing relative to their incomes, they have less for other goods and services. This explains how California, home to some of the world’s greatest wealth, is also home to the highest poverty rate among the 50 states when housing costs are considered.Cox is writing about the USA but, as the evidence shows, other places - Australia, NZ, Canada and the UK - are just as bad:
The answer is to build more houses that people want to live in - not pokey flats in tower blocks, not 'micro-homes', not 21st century council houses but family homes with gardens, y'know: suburbs.
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5 comments:
I say there is no housing shortage overall. We need Council houses with affordable rents and strong restrictions on right to buy; and with a large ageing population, some way to encourage people rattling around in houses too big for them, to move.
Tongue in cheek, I propose compulsory purchase of estate agents' offices - usually beautifully situated for shops and public transport.
The UK's core problem is simply supply and demand. It doesn't take a Masters in Difficult Sums to know that, if you allow net immigration of 300,000 per annum for many years and build fewer than 200,000 new places for folk to live, then the equation's only heading one way.
When that happens, price is the only determinant - balance supply and demand, then the price formula responds accordingly. Day 1 Economics.
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Abolishing as many of the transaction taxes on housing, such as stamp duty, would also help matters. As things stand people are seeing houses as long-term investments which they only wish to cash in on when they die or need end of life care of some description.
Right to buy in this case is a red herring; a council house that is bought by somebody doesn't mysteriously and magically evaporate into the aether when bought, thus selling off council houses doesn't diminish the total housing stock, merely the amount which is subsidised.
What would help a good deal more is to abolish housing benefit. Right at the moment, housing benefit mostly consists of taxing one group of people only to feed the money back to pretty much the same people minus a transaction cost, to let poor people live in rich areas. This doesn't really make a great deal of sense (this is a common theme in UK taxation circles, and an occasional dose of a hallucinogen is useful when trying to understand the situation) and would better be abolished, to let markets set prices properly.
Why has the technology of house building not progressed as other product design and manufacture has.
Workers still stand out in all weathers placing one small block on top of another, stuck together with a mortar that is inferior to what the Romans used. And just to further retard productivity a few years ago we reduced the size of bricks even as builder's hands were getting bigger.
The same applies to our decaying roads.
Doonhamer
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